When buying or renting commercial property, there are many factors to consider. However, even seasoned investors frequently make mistakes that might lead to a catastrophe because analyzing a possible investment can be fairly intimidating.
Follow our checklist for buying a commercial property in Pakistan to discover what inquiries to make and which documents to demand if you want to avoid making such expensive mistakes.
Plots, stores, offices, and warehouses are the primary categories of commercial real estate in Pakistan. If you’re still torn between investing in residential or commercial properties, be sure to read our in-depth information on the subject. You can also look at the most crucial elements for
HAVE BASIC KNOWLEDGE ABOUT PROPERTY
Gathering the fundamental information regarding the property you’re interested in is the first step on our commercial real estate due diligence checklist.
This involves learning about the building’s area, the number of floors, the types of available properties, the total number of commercial units, the size of the parking area, the zoning, the availability of public amenities, and, most importantly, the NOC issued by the relevant development authority.
After gathering the aforementioned information, you should cross-reference the data provided by the seller or real estate agent with the public records for additional confirmation. To find out the current situation of commercial real estate in Lahore, for instance, you may get in touch with the Lahore Development Authority (LDA).
The Sindh Building Control Authority (SBCA) can be contacted by those making investments in Karachi, but for investing in Islamabad you have to check it from CDA.
CONDUCTING BUSINESS INSPECTION IN THE BUILDING
The second step on the checklist for purchasing commercial property is to examine the utilities, facilities, and structural of a facility.
A business venture is typically more expensive than purchasing a home or apartment, thus it is advised to use qualified inspectors and experts to evaluate each section of its structure separately.
The foundation, roof, walls, condition of the windows and doors, electrical system, water supply and waste management system, gas connection, phone lines, fire safety system, emergency exits, underground storage tanks, central air conditioning system, security systems, and other facilities are all inspected as part of this process. To check for mould, termites, or other infestations, you need also engage professionals.
Whether you are a first-time investor or have a lot of business expertise, be careful to work with professionals that are familiar with the regional construction codes. You must consider the housing society’s bylaws when inspecting the building if the property is inside of one.
EVALUATION OF TENANT INFORMATION
The good news is that you may simply renew the existing leases with the current tenants without having to advertise or find new ones. On the other hand, in order to guarantee a consistent rental revenue, you will undoubtedly need to make adjustments or perhaps terminate some contracts.
Therefore, learning more about the current tenants makes up the third item on our checklist for purchasing commercial real estate.
Obtain as much information as you can on the tenants before you sign anything. You should be informed of the kind of firms that are housed in your prospective commercial venture. Verification is also required for the monthly rent, security deposits, and utility responsibilities.
To make sure that each renter will be able to make their payments on time and avoid defaulting, it is also crucial to look into their financial health. You might be able to get a good notion of these businesses’ ability to pay the rent by looking at their business models, because business leases are often for a number of years, you should look into any active liens and lawsuits that each renter may have.
As such tenants might have a bad effect on the reputation of your home, ask the seller about their contract specifics if you come across a company with a history of legal or financial difficulties. They could impact your rental yield as well.
CHECKING ALL THE STATEMENTS & AGREEMENT
The business property you intend to purchase may have had a physical inspection, but what about looking over its non-physical features?
You must examine building permits, architectural drawings, approved plans, zoning paperwork, environmental assessments, financial records, and building code infractions before purchasing commercial real estate.
Additionally, you should ask for details regarding any ongoing and previous legal disputes. You then need to receive and examine several service contracts. Along with having them verified, you should also see if you may terminate them without consequences.
CHECKING PROPERTY DOCUMENTS
Getting and checking the papers is the last thing on our to-do list for buying commercial property.
To clear up any questions you might have about the process, read our guide to selling and transferring property in Pakistan before we explore the list of documents you must get before making the deal.
Our real estate dictionary will also be very helpful if you are new to the real estate sector. Here are some of the most crucial paperwork to review before moving forward with your real estate investment.
- Sale Deed
- Mother Deed
- Approved Plan
- Bank Approval Certificate
- Power of Attorney
- Property Tax Receipts
- Completion Certificate
No matter how unimportant a detail may seem, you should always take extra precautions to make sure you don’t overlook it while purchasing or leasing commercial real estate.
A few thousand rupees spent up front on due diligence is a much better investment than losing several hundred thousand later on. Additionally, employing specialists for building inspection may be a little expensive.
For more information contact Aura Properties, we provide free consultancy & available to assist you regarding any Real Estate query.
RESEARCH & WRITTEN BY:
SANAH ABBASI